Recent Posts:What To Do If the CRA Says You Owe Money (But You Don’t Think You Do)You open a letter from the Canada Revenue Agency (CRA), and your stomach drops. It’s a Notice of Reassessment, and it says you owe a significant amount of money. You read through the explanation, and your panic quickly turns to frustration. They’ve denied a legitimate business expense. Or they’ve added income that isn’t yours. Or they’ve completely misunderstood how your industry works. You know you don’t owe this money. It’s a David vs. Goliath scenario that leaves many taxpayers feeling helpless. But the CRA is not infallible. They make mistakes, misinterpret facts, and apply rules incorrectly. At Padgett Business Services, we stand between our clients and the CRA every day. This guide will show you exactly what to do when the CRA says you owe money, but you know they are wrong. Step 1: Do Not Ignore the LetterThe absolute worst thing you can do is throw the letter in a drawer and hope it goes away. The CRA does not forget. If you ignore a balance owing, the CRA will begin charging compound daily interest. Eventually, they will escalate to collection actions, which can include freezing your bank accounts, garnishing your wages, or placing a lien on your property. You must face the issue head-on. Step 2: Understand the CRA’s PositionBefore you can fight back, you need to understand exactly what you are fighting. Read the “Explanation of changes” section on your Notice of Reassessment carefully. Did they deny a specific deduction because you didn’t provide a receipt? Did they classify a contractor as an employee? Did they disallow a vehicle expense because your logbook wasn’t detailed enough? You cannot win an argument if you don’t know what the argument is about. Step 3: Gather Your EvidenceIn disputes with the CRA, the burden of proof is almost always on the taxpayer. It is up to you to prove that your tax return was correct. Gather every piece of documentation that supports your position. This might include:
If the CRA denied a claim because you didn’t provide a receipt during a desk review, simply finding that receipt and sending it in might be enough to resolve the issue. Step 4: File a Notice of ObjectionIf you have the evidence to prove the CRA is wrong, you must formally dispute their assessment by filing a Notice of Objection (Form T400A). Filing an objection tells the CRA that you disagree with their findings and requests an independent review by an appeals officer. The Golden Rule: Watch the DeadlineYou have a strict time limit to file a Notice of Objection. You must file it within 90 days of the date printed on the Notice of Reassessment, or within one year of the filing deadline for that tax return, whichever is later. If you miss this deadline, the assessment becomes final, and you will have to pay the debt, even if the CRA was completely wrong. Do I Have to Pay While I Object?Generally, no. When you file a Notice of Objection, the CRA’s collection actions are usually suspended for the disputed amount until the objection is resolved. However, there is a catch: interest continues to accrue. If you lose your appeal, you will have to pay the original tax debt plus all the interest that accumulated while you were fighting it. For this reason, some taxpayers choose to pay the disputed amount upfront to stop the interest clock. If they win the appeal, the CRA refunds the money with interest. Step 5: The Appeals ProcessOnce you file your objection, your file will be assigned to an appeals officer. This officer was not involved in the original audit or reassessment. Their job is to review the facts impartially. The appeals officer will contact you (or your representative) to discuss the case. This is your opportunity to present your evidence and explain your position. The officer will then make a decision to either:
Step 6: Tax Court (The Final Option)If the appeals officer confirms the reassessment and you still believe you are right, your final option is to appeal to the Tax Court of Canada. This is a formal legal proceeding, and you will almost certainly need a tax lawyer to represent you. Frequently Asked QuestionsQ: Can I just call the CRA and argue my case over the phone?A: If the issue is a simple administrative error (like a transposed number), a phone call might fix it. But if it’s a dispute over the interpretation of tax law or the validity of an expense, the phone agents cannot help you. You must file a formal Notice of Objection.
Q: Will filing an objection make the CRA angry and trigger a full audit?A: No. Filing an objection is your legal right. The Appeals Division operates independently from the Audit Division. While an appeals officer can theoretically uncover new issues, their primary focus is resolving the specific dispute at hand.
Q: How long does the objection process take?A: It requires patience. It can take several months, or even over a year, for an appeals officer to be assigned to your case, depending on the complexity of the issue and the CRA’s backlog. Level the Playing FieldArguing with the CRA is like playing a game where the other side wrote the rulebook. It is intimidating, complex, and incredibly stressful. You don’t have to fight this battle alone. At Padgett Business Services, our tax professionals know the tax code inside and out. We can evaluate the CRA’s position, gather the necessary evidence, draft a compelling Notice of Objection, and negotiate directly with the appeals officer on your behalf. If the CRA says you owe money and you know they’re wrong, contact us today. Let us level the playing field and fight for what’s fair. The post What To Do If the CRA Says You Owe Money (But You Don’t Think You Do) appeared first on Padgett Business Services | Canada. 06/17/2026
SMALL BUSINESS BUILDERHome Buyer’s Plan The Home Buyer’s Plan is a program that allows you to take a tax free, lump-sum withdrawal from your RRSP to buy or build a home for yourself or for a related person with a disability. Withdrawals of up to $35000 can be made but note that the withdrawal must be made using form T1036 “Home Buyer’s Plan Request to Withdraw Funds from an RRSP”. After a two-year period, you must start making annual repayments to replenish your RRSP. There is a maximum of fifteen years provided for the repayment. Since the amount of funds withdrawn was not taxable, the repayment is not deductible and does not affect your RRSP deduction limit. If less than the required annual repayment is made, it will be added to your income. Unless you are a person with a disability or you are helping a related person with a disability buy or build a home for their specific needs, you must be a “first time home buyer” to qualify for this program. A “firsttime home buyer” generally means that in the prior 4 years, neither you nor your spouse/common law partner owned a home. As of 2020, there is an exception to this 4-year rule if there has been a breakdown of a marriage or common-law partnership, assuming the following criteria are met:
Home Buyer’s Amount You can claim a $5,000 tax credit for the purchase of a qualifying home in the year if both of the following apply:
There is an exception to the “first-time” home buyer requirement for persons with a disability who qualify for the disability tax credit. However, for this exception to apply, the reason for the new home purchase is because it is a more accessible dwelling or in an environment better suited to the personal needs and care of that person. The credit can be claimed by you or your spouse or common-law partner or split between the two returns as long as the $ 5 000 amount is not exceeded. You can also claim the credit if you are purchasing the home for a family member who is disabled provided the home is more suitable for them as mentioned above. Tax credits are applied against taxes payable at a 15% rate, so the Home Buyer’s Amount provides a $750 tax savings. British Columbia, Saskatchewan, Quebec and Nova Scotia also offer their own provincial tax credits for first-time home buyers. 07/05/2023
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